India, Russia: Further Collaboration in IT Likely

The latest restrictions put by the Trump administration on H-1B visa holders from India have created problems for the Indian information technology companies for maintaining their business operations in the USA, and many of the companies are exploring immediate possibilities to diversify into other countries including Russia and Japan.

Russia has emerged as the major destination in IT collaboration with the Indian companies as there is a vast market in Russian Federation and there are many businesses in Russia with strong hardware capability. Indian companies were earlier too much occupied with the western markets, especially of the US and only now after the Trump administration's protectionist policies and steps against outsourcing, the leading Indian IT companies like TCS, Infosys, Wipro, and HCL Tech are focusing on other countries, especially Russia.

Under Prime Minister Narendra Modi, the Indian government is interested in expanding ties with Russia in IT as also in other technological areas. The feeling in the External Affairs Ministry circles is that the Indian companies should take every possible step to look for other markets for their software products since the Trump administration is determined to impose restrictions on outsourcing and there is not much scope for bargaining from the Indian side on behalf of the Indian industry. So, in the present situation, it is better to keep the options open and to organise other big markets to sell Indian software products.

Recently, the Indian Cabinet approved an MoU to promote joint scientific and research activities with the Russian Federation. Under this MoU valid for five years, India and Russia will exchange information, establish direct connections between specialists, scientists and scientific organisations, form projects aimed at joint research and aim at the development of interdisciplinary and multi-institutional projects with the participation of industry. Indian officials are looking at the vast possibilities of India-Russia collaboration under this MoU.

Indian sources say that the upcoming international conference in St. Petersburg and the subsequent summit between Russian President Vladimir Putin and the Indian Prime Minister Narendra Modi might witness a big expansion of the IT partnership between the two countries. President Putin is interested in making use of Indian software talent in the modernisation programme of the Russian industry. Indian IT companies will be represented at the St. Petersburg international conference where the Indian Prime Minister is the guest of honour.

Indications so far suggest that the Russian officials have already discussed the possible areas of collaboration with the Indian IT companies and Skolkovo, the leading Russian technology hub with partnerships with leading US companies like Boeing and IBM, is interested in partnering with Indian IT firms. This tech hub on the outskirts of Moscow comprises about 1,000 companies including start-ups, and Indian oil companies have expressed interest in software for oil exploration developed by Rock Flow Dynamics, a Skolkovo based company.

The Russian sources point out that Skolkovo has already developed technologies for smart cities and the company is very much keen to take part in the ambitious, smart cities programme currently on in India. Russian companies feel that Indian IT giants have world recognition and brand value and it will be beneficial for both to collaborate in the IT sector. In fact, India is setting up an IT cluster in Moscow, and this can be the beginning of significant efforts for collaboration between both the countries in IT.

Ironically the weakest link in Indo-Russian cooperation remains trade and economic ties. Trade between the two countries is extremely small. India and Russia are already trying to boost the economic partnership through Comprehensive Economic Partnership Agreement (CEPA). Russia's move to encourage the promotion of groupings like RIC (Russia-India-China), BRICS (Brazil-Russia-India-China-South Africa), as well as SCO (Shanghai Cooperation Organisation) is intended to create a forum outside the Western block where India and Russia along with other countries can discuss issues without western pressure.

The "Strategic Partnership" between Russia and India was upgraded to the "Special and Privileged Strategic Partnership" in December 2010 during the visit of Vladimir Putin to India. The "Druzhba-Dosti" Vision was signed in December 2014 for strengthening the Indian-Russian Partnership over the next decade. However, despite these the Indian-Russian trade and economic linkages remain weak. Total bilateral trade is about 6.7 billion (2015), which is extremely low. While Russia makes up just 1 per cent of India's total trade, India accounts for only 1.2 per cent of Russia's overall trade (2015-2016).

In order to address these challenges and realise the trade and investment targets that have been mutually set, India and Russia should take the lead in finalising the India-Eurasian Economic Union (EEU) Free Trade Agreement (FTA), encompassing trade in goods, trade in services and investment, which would serve as a catalyst for enhancing the levels of economic linkages - not just between India and Russia, but also in a wider context of the Eurasian region. The June summit may act as a breakthrough in India-Russia economic relations.